Based on new analysis, the average earner in the UK would have to work half a century of income to achieve the net worth of the wealthiest 10% in the country.
Growing Financial Divide Over Time
This research analyzed net worth information including the recent health crisis years and discovered that in the pre-financial crisis era, it would have required 38 years of average worker salary to join the top 10th of the financial hierarchy.
A research lead involved with the analysis stated: "Financial divides in Britain are now so large that a regular employee saving all their earnings across their entire working life would remain unable to attain the highest level of the financial hierarchy."
Quantifying the Economic Gap
The analysis revealed that the difference between the assets of the median citizen and an individual in the richest segment was £1m in the pre-crisis period, but had expanded to £1.3 million in real terms by 2020-22.
The economist added: "These differences are particularly worrying as economic movement in Britain is restricted – those who commence life wealthy tend to continue being rich, and vice versa."
Relative Wealth Inequality
Despite the wealth gap growing in absolute terms, the percentage of complete net worth in the UK owned by the richest households – known as "proportional economic disparity" – has been "broadly stable since the 1980s," according to the analysis.
During this period, overall assets in the UK surged from three times the annual GDP, to nearly seven and a half times.
Factors of Financial Divide
Termed "automatic" appreciation, through increasing property values and changes in retirement fund assessments, were the main drivers of the widening wealth gap since 2010, as stated in the study.
These increases typically went to older, property-owning households, the research shows – intensifying the intergenerational wealth divide.
Generational Financial Divides
The median economic difference between people in their early 30s and those in their early 60s more than doubled in inflation-adjusted terms, from £135k in 2006-08, to £310,000.
Regional Variations
There were also stark geographic differences, with the typical amount of wealth in recent years amounting to £290,000 in the southeastern region, where housing costs have generally grown substantially, as opposed to £110,000 in the northeastern region.
Pandemic Period Consequences
Throughout the COVID period, when numerous employees were covered under the public-funded employment protection, and Covid shutdowns limited opportunities for spending, the information reveals countless homes were capable of accumulating, growing their net worth.
Higher-income households achieved superior outcomes, though. "The typical family in the poorest fifth saw their cash reserves rise by merely £80 over the pandemic period (across the pandemic timeframe), broadly the same as the pre-crisis period. Conversely, the typical family in the wealthiest fifth saw their available funds grow by 4,200 pounds," the analysis concludes.
